Credit Limit

A credit limit is the maximum amount a borrower can use on a revolving credit account. It applies to products like credit cards and lines of credit.

Lenders set credit limits based on income, credit history, and risk. Exceeding the limit can trigger fees or declined transactions, and higher usage can raise credit utilization.

Related Terms

Credit Utilization

Credit utilization is the percentage of available revolving credit that a borrower is using. It is a...

Credit Score

A credit score is a numerical rating that represents a person's creditworthiness based on their cred...

Line of Credit

A line of credit is a type of revolving credit account that allows a borrower to draw funds up to a ...

Credit

In banking, a credit is a transaction that increases the balance in your account. On your bank state...

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